Full extent of fraud at Astonbrook Housing Association revealed in a bombshell report by the Charity Commission.

Crooked staff stole millions of pounds from a publicly-funded Birmingham refugee charity – withdrawing up to £10,000 in petty cash at a time.

The full extent of fraud at Astonbrook Housing Association, which provided support to refugees across the West Midlands, was revealed in a bombshell report by the Charity Commission.

Six men were convicted last year in connection with an £1.8 million fraud at the charity, based in Highgate and Erdington. including former chief executive Mohammed Hassan Arwo and support manager Abdillahi Musa Abdi.

They were both convicted of conspiracy to defraud and each sentenced to four years and six months jail. But a Charity Commission report suggests the amount of mispent money may have been much higher.

Astonbrook received £6 million from Birmingham City Council from 2004 up until 2008, and £15 million in one year from the UK Border Agency, part of the Home Office. It was created as a private limited company in 2001 and gained charitable status in 2002.

The Charity Commission report exposed the full scale of the crimes by revealing:

False invoices were created for fictitious companies;

Cheques raised in payment of the fictitious invoices were made out to individuals at the charity and to their extended family or to commercial companies connected to staff and trustees;

Ghost employees were listed on the payroll, some of whom were the chief executive’s family members who lived overseas and who had never worked for the charity;

A large amount of money was taken out of the charity as petty cash, often £10,000 each time. The records maintained were inadequate;

Trustees and senior staff used charity funds to purchase residential properties, used either as personal housing for them and their extended families or rented back to the charity as accommodation for asylum seekers;

Contracts were awarded to businesses with connections to people at the charity including trustees.

Michelle Russell, Head of Investigations and Enforcement at the Charity Commission, said: “This case involved the appalling abuse of a charity that provided vital services to many vulnerable people.

“It involved 1,800 fraudulent payments, fictitious invoices, ghost employees and charity money being paid to individuals at the charity, their family members or companies connected to them.”

But she insisted that the case showed procedures for spotting abuse had worked.

But MP Gisela Stuart (Lab Edgasbton) said the case raised questions about the scrutiny of charities.

She said: “Why did it take so long to spot that something was wrong?

“My fear is that we shy away of asking tough questions about organisations like this because nobody wants to be seen to be attacking asylum seekers or charities which help them.”